According to TrendForce research, after smartphone panel shipments peaked at 1.95 billion in 2018, overall shipments declined gradually year over year. After 2020, due to the impact of the COVID-19 pandemic, shipments fell sharply to 1.796 billion units. In 2021, as the pandemic festered along with serious shortages of components overall, downstream customers continued to raise inventories to allay possible risks of shortages, driving the scale of panel shipment upwards again to 1.888 billion units. Looking forward in 2022, as mobile phone shipments are expected to remain flat, overall smartphone panel shipments have the opportunity to maintain a similar level to that in 2021, reaching approximately 1.872 billion units, a decline of only approximately 0.9%.
Judging from the shipment scale of major panel makers, BOE has become the global leader in smartphone panel shipments and it has an opportunity to maintain a scale of 502 million panels in 2022. SDC ranks second and it is expected to grow to the level of 479 million units in 2022, of which all shipments are AMOLED panels. Third to fifth consist of Tianma Microelectronics, Innolux, and TCL. From the perspective of the previous five manufacturers, the three major panel manufacturers in China alone contributed approximately 52.1% of global smartphone panel shipments, meaning that China has become an important hub for the production of mobile phone-related components and assembly, followed by South Korea panel companies at 28.5%, Taiwanese panel companies at 10.5%, and Japanese panel companies at 8.9%.
The proportion of AMOLED panels is still growing in the mobile phone panel market. As a-Si LCD panels fulfill demand for the low-end entry-level market and LTPS LCD panels nestle between the two, the market is becoming increasingly crowded. From the perspective of AMOLED technology trends, in response to changes in mobile phone specifications, AMOLED is currently developing in the direction of power conservation and folding. Therefore, technologies such as LTPO backplane and COE form the key development directions of several major panel manufacturers at this stage. Excluding SDC , which maintains certain leading advantages and is the benchmark for other panel manufacturers, panel specification requirements required by brands such as Apple for the iPhone will also have a significant impact on the development direction of AMOLED panel specifications. At present, China’s production capacity is mainly based on flexible AMOLED panels, while SDC has invested resources in both rigid AMOLED and flexible AMOLED panels. According to the overall AMOLED panel shipment plan for 2022, shipment scale is expected to be approximately 703 million units, or 15.4% YoY.
In the past, LTPS panels were produced predominantly by Japanese panel manufacturers. In the early days, due to these companies’ close partnership with Apple, LTPS panels were primarily used in mid-to-high-end smartphone models, which also led to a wave of LTPS LCD production line expansion. However, as the technology matured, coupled with the successive rise of Chinese panel plants and the growth of Chinese mobile phone brands, the primary panel manufacturers in the overall LTPS LCD supply have gradually switched from Japanese to Chinese panel companies and prices and costs have also continued to improve and decline. Overall LTPS LCD panel factory shipments are forecast to reach approximately 494 million units in 2022, a YoY decline of 10.7%.
a-Si LCD panels were an important foundation in the development of the entire smartphone panel market. However, with the rise of LTPS LCD and the subsequent increase in AMOLED panel production capacity, a-Si panels have gradually retreated to the low-end entry-level mobile phone market. a-Si LCD is mainly based on the HD resolution and the bulk of supply still comes from Chinese panel manufacturers, of which BOE is the main panel supplier. It is worth mentioning, due to fierce competition in the low-end mobile phone panel market, most Japanese and Korean panel manufacturers have successively reduced their supply of a-Si panels. Among Taiwanese panel manufacturers, AUO has also continued to reduce the supply of its a-Si panels. Shipments of a-Si LCD panels in 2022 is forecast at approximately 675 million units, a decline of 7.0% YoY.
Benefiting from expanded introduction of AMOLED mobile phone models by Apple, Samsung and Chinese brands, the market penetration rate of AMOLED panels for mobile phones in 2021 was 42%, according to TrendForce‘s investigations. In 2022, continuous investment undertaken by numerous panel factories to expand AMOLED production lines will drive AMOLED panel penetration rate to an estimated 46%. However, TrendForce further asserts that the continued tight supply of AMOLED DDI and the willingness of mobile phone brands to expand the use of AMOLED panels will be the keys influencing AMOLED market penetration rate next year.
Continued tightness in AMOLED DDI supply for mobile phones
The AMOLED DDI process requires dedicated medium voltage 8V processes at the 40nm and 28nm nodes. However, the supply of dedicated process capacity in 2021 is limited. In addition, Samsung’s Austin, Texas fab was shut down due to a snowstorm in early 2021, resulting in serious shortages of AMOLED DDI. New capacity in 2022 includes UMC at the 28nm node and SMIC at the 40nm node. However, since capacity and expanded capacity still cannot effectively meet the various brand’s demand for AMOLED DDI, Samsung’s fab will continue to reduce OLED DDIC production scale in the future. Stocking issues are expected to plague AMOLED DDI continuing into 2022.
TrendForce states, UMC’s primary expansion plan for 28nm AMOLED DDI will be completed by the end of 2023, so AMOLED DDI supply tightness is expected to be alleviated in 2023. In addition, other foundries have plans to develop dedicated AMOLED DDI processes but, due to a belated development schedule, these plans will not be able to address the AMOLED DDI shortage in 2022. Facing limitations on dedicated AMOLED DDI production capacity, traditional front-line DDI design houses are actively booking the majority of production capacity, while other DDI design houses are also competing for limited production capacity in order to enter the AMOLED panel factory supply chain.
Mobile phone brands expand their willingness to adopt AMOLED panels
Facing the gradual maturity of AMOLED panel technology and the continuous improvement of production yields, AMOLED market penetration rate will increase from 42% in 2021 to 46% in 2022. This will reduce the market share of LTPS panels in the mid-tier market and drive panel makers to transfer LTPS production capacity to medium size applications. However, mobile phone brands face the risk of AMOLED DDI continuing to being out of stock in 2022. In addition to the high price of AMOLED panels and the steady increase in the pricing of other semiconductor components, in order for mobile phone brands to maintain profitability and achieve annual shipment goals, TrendForce expects that a small number of AMOLED products may switch over to LCD panels to pad shipments in the mid-to-low-end mobile phone market, allowing LTPS panel makers to gain a bit of breathing room in the mid-end market.
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